1.On July 1, 20X1, Vail Corp. issued rights to stockholders to subscribe to additional shares of its common stock. One right was issued for each share owned. A stockholder could purchase one additional share for 10 rights plus $15 cash. The rights expired on September 30, 20X1. On July 1, 20X1, the market price of a share with the right attached was $40, while the market price of one right alone was $2. Vail's stockholders' equity on June 30, 20X1, comprised the following:

Common stock, $25 par value,

4,000 shares issued and outstanding

$100,000

Additional paid-in capital

$60,000

Retained earnings

$80,000

By what amount should Vail's retained earnings decrease as a result of issuance of the stock rights on July 1, 20X1?